Correlation Between Newell Brands and Virgin Group

Can any of the company-specific risk be diversified away by investing in both Newell Brands and Virgin Group at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Newell Brands and Virgin Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Newell Brands and Virgin Group Acquisition, you can compare the effects of market volatilities on Newell Brands and Virgin Group and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Newell Brands with a short position of Virgin Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newell Brands and Virgin Group.

Diversification Opportunities for Newell Brands and Virgin Group

-0.7

Correlation Coefficient

Newell Brands  Virgin Group

Excellent diversification

The 3 months correlation between Newell and Virgin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Newell Brands and Virgin Group Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Group Acquisition and Newell Brands is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Newell Brands are associated (or correlated) with Virgin Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Group Acquisition has no effect on the direction of Newell Brands i.e., Newell Brands and Virgin Group go up and down completely randomly.

Pair Corralation between Newell Brands and Virgin Group

Considering the 90-day investment horizon Newell Brands is expected to under-perform the Virgin Group. But the stock apears to be less risky and, when comparing its historical volatility, Newell Brands is 1.09 times less risky than Virgin Group. The stock trades about -0.15 of its potential returns per unit of risk. The Virgin Group Acquisition is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  141.00  in Virgin Group Acquisition on December 29, 2024 and sell it today you would lose (7.00) from holding Virgin Group Acquisition or give up 4.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Newell Brands  vs.  Virgin Group Acquisition

Newell Brands

Risk-Adjusted Performance

Very Weak

Over the last 90 days Newell Brands has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Virgin Group Acquisition

Risk-Adjusted Performance

Insignificant

Over the last 90 days Virgin Group Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Virgin Group is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Newell Brands and Virgin Group

The main advantage of trading using opposite Newell Brands and Virgin Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newell Brands position performs unexpectedly, Virgin Group can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Virgin Group will offset losses from the drop in Virgin Group's long position.

The idea behind Newell Brands and Virgin Group Acquisition pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.